RGGI/ WCI Overview. Regional Greenhouse Gas Initiative (RGGI) Western Climate Initiative (WCI)...

RGGI/ WCI Overview

Regional Greenhouse Gas Initiative (RGGI)

Western Climate Initiative (WCI)

participants 10 states in Northeast 7 states in West plus several Canadian provinces

covered entities/ emissions entities: fossil fuel-fired electricity generating units with a power production capacity of at least 25 megawatts

emissions from:electricity generationindustrial/commercial combustion and production – based on certain thresholdsresidential/commercial/industrial combustion – regulated “upstream”transportation – regulated “upstream”Threshold = 25,000 metric tons

Regional Greenhouse Gas Initiative (RGGI)

Western Climate Initiative (WCI)

caps and distribution 2009-2014: “actual” emissions2015-2017: 2.5% reduction2018- : 10% reduction

2012-2014: actual emissions2015-2020: unknown

allowance distribution auction* - states have discretion, but agreed to an auction; some states reconsidering

up to each jurisdiction – state legislatures in some states rejected auction

Regional Greenhouse Gas Initiative (RGGI)

Western Climate Initiative (WCI)

offsets: allowable projects landfill gas (methane) capture and combustion;

sulfur hexafluoride (SF6) capture and recycling;

afforestation (transition of land from non-forested to forested state);

end-use efficiency for natural gas, propane and heating oil; and

methane capture from farming operations

agriculture (soil sequestration and manure management)

forestry (afforestation/reforestation, management, conservation)

waste management (landfills and wastewater)

Regional Greenhouse Gas Initiative (RGGI)

Western Climate Initiative (WCI)

offsets: amounts normal: 3.3% “offset trigger”

[$7/ton]: 5% “safety valve trigger”

[$10+/ton]: 10%

up to 49%

Legal Limitations

• Compacts Clause– “No state shall, without the consent of

Congress, . . . enter into any Agreement or Compact with another state, or with a foreign power[.]” U.S. Const. art. I, § 10, cl. 3

– Indicia of compact• Binding reciprocity• Regulatory body

Equity Implications

• Setting the cap: which states/industries should bear the burden?

• Allowance distribution: what if only some states agree to an auction?

• Offsets: won’t some states benefit more than others?

Legal Limitations

• Dormant Commerce Clause– Prohibits states from imposing undue burden on

interstate commerce• No facial discrimination or economic protectionism• “undue burden” – based on balancing

– Extent of the burden– Justifications for the burden– Whether alternatives exist

Equity Implications

• Participants in a regional program cannot exclude non-participants from benefitting through use of offsets (unless the program prohibits offsets entirely) – is this fair?

• Can participants regulate products introduced by non-participants into the market?– E.g., RGGI – covers emissions within participating

states; what about Penn. Power?– WCI – trying to address this, but how?